7 Apr 2014
NZD/USD outlook neutral this week - Westpac
FXStreet (Bali) - Imre Speizer, FX Strategist at Westpac, notes that the NZD/USD outlook for this week is neutral on the basis of economic data flow in the US to soon turn USD positive.
Key Quotes
"The NZD has struggled against a resurgent US dollar lately. Notwithstanding Friday's reaction to a US payrolls report which wasn't that bad, the US dollar has firmed in response to the hawkish Fed signals since mid-March. Additionally, economic data flow should soon turn USD-positive."
"This has pushed NZD/USD back inside its multi-year range such that 0.8600 remains a major obstacle."
"We also take note of our NZ economic data pulse model which shows the momentum of NZ economic data has slowed during the past month. This could cause the market to reassess its expectations of how fast and far the RBNZ will hike the OCR, in turn capping NZD/USD."
"This week’s NZ calendar is busy with second tier data. Updates on housing come from the QV (Mon) and REINZ (Fri) series. The NZIER business sentiment survey (Tue) is always watched by the market, electronic retail spending (Tue) less so, manufacturing PMI (Thu) occasionally, and food prices Fri) hardy ever."
"From the US calendar there’s not a lot to inspire the data junkies - NFIB, April prelim Michigan sentiment and PPI are the main data releases. Bullard, Kocherlakota, Plosser, Evans and Tarullo are on the podium but the main Fed event will be the minutes from the Fed’s mid-March meeting. By giving regional (hawkish) presidents a louder voice, the Fed minutes have lately given the impression of an FOMC that is more hawkish than is really the case. We suspect that will be the case once again with talk of "rate hikes" getting more airplay than it really deserves."
Key Quotes
"The NZD has struggled against a resurgent US dollar lately. Notwithstanding Friday's reaction to a US payrolls report which wasn't that bad, the US dollar has firmed in response to the hawkish Fed signals since mid-March. Additionally, economic data flow should soon turn USD-positive."
"This has pushed NZD/USD back inside its multi-year range such that 0.8600 remains a major obstacle."
"We also take note of our NZ economic data pulse model which shows the momentum of NZ economic data has slowed during the past month. This could cause the market to reassess its expectations of how fast and far the RBNZ will hike the OCR, in turn capping NZD/USD."
"This week’s NZ calendar is busy with second tier data. Updates on housing come from the QV (Mon) and REINZ (Fri) series. The NZIER business sentiment survey (Tue) is always watched by the market, electronic retail spending (Tue) less so, manufacturing PMI (Thu) occasionally, and food prices Fri) hardy ever."
"From the US calendar there’s not a lot to inspire the data junkies - NFIB, April prelim Michigan sentiment and PPI are the main data releases. Bullard, Kocherlakota, Plosser, Evans and Tarullo are on the podium but the main Fed event will be the minutes from the Fed’s mid-March meeting. By giving regional (hawkish) presidents a louder voice, the Fed minutes have lately given the impression of an FOMC that is more hawkish than is really the case. We suspect that will be the case once again with talk of "rate hikes" getting more airplay than it really deserves."